1.Use Porter's five forces of competition' framework to show how the structure of the airline industry has caused low profitability during the past twenty years. Below are Porter's five forces of competition. In them you will understand what has caused low profitability. The bargaining power of suppliers: Labor is the airline industry's largest single expense. Most airline workers belong to one of a dozen unions, which give the airline workers strong power in negotiations with …
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showed last 75 words of 567 total
…carriers compete for short-distance flights. The airline industry has become more concentrated over the last 10 years. Two main factors have contributed to this concentration: several mergers have taken place during the last decade. As traffic growth has slowed and carriers have exhausted means to boost profits through conventional cost-cutting measures, mergers provide opportunities for saving by consolidating administrative, distribution and maintenance operations. Bankruptcies have also contributed to the increased concentration, especially in the early 1990s.